I am often asked “when is the best time to invest” or “now is a good time to start investing”. Now, in 2014, may be the best time to invest or start investing… but only if you have your ducks lined up.
Many people start investing money prematurely – before they have their financial house in order. Then they keep investing until they either want their money back to buy something, need their money back to pay unexpected bills, or start losing money. In other words, they start Affiliate Marketing before they have their ducks lined up. Three factors determine the best time to invest money or to start investing. And no, the best time to invest does not depend on the state of the economy or the development of the stock markets.
Start investing
Before you start investing, you should have a reliable source of income and a good cash reserve to cover financial emergencies and planned purchases. Third, before investing any (for you) serious amount of money, you should have a basic understanding of financial terms and stocks, bonds, and mutual funds. Even if you want to hire the services of a financial planner, you need to be able to communicate with him or her.
Saving money to build a cash reserve is the first step for many people. Once you start investing money towards a long-term goal like retirement, you don’t want to interrupt the process because you run out of money. This can be costly, especially if your timing is poor and you have to liquidate at a loss.
Financial house
The best time to invest is when you have your financial house in order. On the other hand, the best time to invest money in stocks, bonds, and mutual funds is another question. For example, 2014 may not be the best time to invest in stocks or even bonds. But you have to let your money grow. Because of this, you need to get a handle on mutual funds and the process known as asset allocation. Mutual funds are the best way to start investing. They offer average investors professional money management and a diversified portfolio, usually at a reasonable cost.
Asset allocation is the most important consideration when investing money. You want to spread your money across asset classes to both grow your money and moderate your risk. Mutual funds make this easy. They offer stock funds, bond funds, and money market funds. If you want to start investing (or just start fresh) in 2014, put equal amounts of money into a diversified (large-cap) stock Affiliate Marketing fund, a medium-term bond fund, and a money market fund. This asset allocation is simple and should keep you out of serious trouble even if 2014 turns out to be a tough year for investors.
No one knows the best time to invest in stocks or bonds, but the best time to invest money or start investing money is NOW when you have your ducklings lined up. NOW is also the best time to boost your investor IQ by learning about investing fundamentals and investing strategies.